' 


Great Problem 
of the 


Public Service 
Corporation 


December, 1912 


eon Mm 


BY 
H. M. BYLLESBY 


mae 


‘ll ars a 2 He 


An Article Written for the 

New York Commercial and 

Printed in that Publication 
December 14, 1912 


J Reprinted by 
‘ H. M. Byllesby & Company 
yp Engineers 
> Insurance Exchange Bldg. Trinity Building 
Par Chicago New York 
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PAQGO 
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The Great Problem of 
the Public Service Corporation 


HERE is no other line of industry 
requiring the continual increase of- 
capital investment demanded by the 
enterprises broadly embraced under 
the term ‘‘public service corpor- 
ations,’’ embracing electric light and 


power, street railways, steam railways 


and their terminals, telephone com- 
panies and gas companies» The ex- 
tent to which the vast and heretofore 
continually increasing commercial and 
manufacturing transactions of our 
great country 1s dependent upon the 
continued development and the able 
management of such corporations is 
not at all understood by the great 
mass of the voting public. A com- 
munity which by accident, design, or 
misfortune is poorly served by any of 
the so-called public service corpor- 
ations is a community which neces- 


/ 


6 The Great Problem of the 


sarily is behind-hand in its material 
development. A community suffering 
from faulty equipment or manage- 
ment of the public service corpor- 
ations likewise endures a consequent 
loss of material advancement with at- 
tendant inconvenience and dissatis- 
faction. 


The amount of new capital for 
purely conservative and necessary de- 
velopment and extensions of public 
service corporations annually reaches 
figures utterly beyond the comprehen- 
sion of the average individual who is 
not personally cognizant of the oper- 
ations and affairs of such companies 
and enterprises. The stability of 
their income under normal conditions 
and without unfair restrictions and 
interference is more pronounced, I 
believe, than in any other line of hu- 
man enterprise. 


It is a platitude to refer to the 
great part which the energetic and 
courageous and far sighted develop- 
ment of the public service corpor- 


Public Service Corporation 7 


ations at the hands of the great lead- 
ers of those corporations has had in 
the past in the development of this 
country. No one questions the oc- 
currence (from time to time) of mis- 
takes, errors, hardships and frauds in 
the past on the parts of both parties 
to these enterprises, viz., the pro- 
jectors and owners of the enterprises 
on the one hand, and the citizens, 
communities, governments and munic- 
ipalities served on the other. The 
net result, however, has been a service 
on the part of all such corporations 
in the United States of America 
~which has not its equal in the world. 


In the period of the earlier develop- 
ment of such enterprises, great risks 
were incurred, huge sums were lost 
and huge sums of money or its equiv- 
alent in substantial income earning 
property have been achieved. Prob- 
ably, viewing the past and considering 
both the failures and successes of such 
enterprises, the capital invested has 
received a smaller total profit on its 
total amount than in the average of 


8 The Great Problem of the 


mercantile, commercial, manufactur- 
ing or trading enterprises. The busi- 
ness today, as regards the various 
physical elements entering into it, the 
machinery used, the motive power and 
the general development of the art is 
wholly beyond the experimental stage. 


However, in nearly every direction 
opportunities still present themselves 
and there is a erying demand for fur- 
ther extension of service of such cor- 
porations. While, from the now 
somewhat extensive experience and 
history of the art it is less difficult 
than in the past to forecast the prob- 
able monetary outcome of such ex- 
tensions, enlargements or new de- 
velopments, there still exist many 
cases where the returns to be achieved 
are still more or less problematical 
and in some eases absolutely problem- 
atical as to the dates at which returns 
will be reached. 


Up to a comparatively recent period 
the public service official was justified 
in extending the operations under 


Public Service Corporation 9 


his charge on the general doctrine of 
averages—that if a given extension 
proved unprofitable for the time 
being or permanently, it would be 
compensated for by the greater profit 
to be reached from some other con- 
temporaneous or subsequent or exist- 
ing branch of or extension to the serv- 
ice. Under this condition of affairs 
enterprise was fostered, development 
went forward actuated by the hope of 
a reward beyond the ordinary fixed 
small return of the absolutely settled 
and non-hazardous enterprise. 


Today throughout the country the 
unmistakable tendency is by Inter- 
state Commerce Commissions, Public 
Utility Commissions, and by the law 
making and law administering bodies 
to hamper and curtail and paternal- 
ize the conduct of all these corpor- 
ations to a point which is rapidly de- 
stroying the enterprise of the indi- 
vidual officers and employes of such 
corporations and putting a period to 
the further investment of capital for 
the extension and enlargement of such 


10 The Great Problem of the 


enterprises. The result of this policy, 
if carried along the lines of its pres- 
ent extreme tendencies, will be to 
simply stop the further energetic de- 
velopment of these enterprises; to de- 
stroy the individual initiative of these 
corporations and this policy, if per- 
sisted in along the program of the po- 
litical agitators of the present time, 
leads inevitably and logically to Fed- 
eral and Municipal Ownership. 


A great deal is said from time to 
time regarding the underlying com- 
mon sense of the Anglo-Saxon race, 
particularly that branch of it living 
in the United States of America. In 
the abstract this is true. I believe 
that the general trend of civilization 
through its various vicissitudes is on 
the average and as judged by terms of 
years, continually upward. 3 


The map of a steam railroad cross- 
ing the American continent, even if 
drawn on a very large scale, will show 
that railroad on a general uniform 
line; the facts being, however, that 


2A AeA ek EI Pa es Sa Rash th dati nes 


a” 


Public Service Corporation 11 


the railway is full of curves and 
changes of direction which it is not 
possible to reproduce on any map 
which could be displayed in any ordi- 
nary room or Office. 


No one doubts the beneficent results 
that eventually followed the great 
Civil War of the United States. No 
one doubts the terrific loss of treas- 
ure, of human life, and no one, at 
least of the preceding generation, for- 
gets the pain and anguish and bitter- 
ness of that struggle. The public 
service corporations in the past have 
made no greater errors of judgment 
or of management; they have made no 
greater departure from the correct 
rules of conduct than have the com- 
munities and individuals and govern- 
ments concerned with such corpor- 
ations. Whatever mistakes, hardships, 
errors or crimes were committed were 
in any fair analysis of the question, 
equally chargeable to both parties to 
the contract. 


A new situation and new conditions 
are now confronting the public and 


12 The Great Problem of the 


these corporations. It is a time for 
the underlying common sense of our 
people to take these questions out of 
the hands of the muck-raker and pro- 
fessional politician and to put them 
before the great tribunal of common 
sense and love of justice of the Ameri- 
can people. Our country has reached 
a point of intelligence and develop- 
ment where it should recognize, and 
at some time will recognize, that these 
questions are of such deep and far 
reaching importance that they should 


be placed in the hands of entirely | 


non-political tribunals, fair-minded, 
experienced and candid, and who will 
carefully weigh all the questions in- 
volved ; with a proper attention to the 
economic questions involved and with 
a full realization of the obligations of 
common honesty resting upon all of 
us to each other, to the investor, to 
the wage earner, and to the communi- 
ties concerned. 


Unless this course is pursued, the 
present program leads inevitably to 
paternalism and Federal and Muni- 


La it) 


Public Service Corspranion 13 


cipal ownership. It is unnecessary to 
point out the perils to our beloved 
country which would follow the plac- 
ing in the hands of a political party 
or of the Government, of the enor- 
mous patronage resulting from Fed- 
eral and Governmental ownership of 
this huge fabric of public service cor- 
porations. The public does not desire 
this; the investor does not desire it, 
and common sense abhors such a 
policy. The economic history of 
civilization teaches beyond the possi- 
bility of a doubt that the best results 
to the State and its citizens are 
reached by wise and prudent encour- 
agement of individual enterprise and 
thrift, accomplished by allowing suit- 
able rewards to follow successful en- 
terprises. 


The public service enterprises of the 
United States of America~have been 
one of the greatest factors in the de- 
velopment of this country. There 
are vast sections of country which re- 
quire the services of such companies; 
existing and already served communi- 


14 The Great Problem of the 


ties require continual extensions to 
the operations of such corporations. 
All this requires many millions of dol- 
lars annually. 


If the laws and various commissions 
dealing with these subjects approach 
them with a desire to encourage enter- 
prise and not to throttle it; if rewards 
are allowed to follow the energetic de- 
velopment and the hazards of these 
corporations and if these laws and . 
commissions recognize that their ob- 
ject is two-fold—first to protect the 
public and the State against selfish- 
ness, and equally on the other hand, to 
protect the capital and the brains and 
the enterprise of these corporations 
against unfair restrictions and the 
embarrassments of paternalism, these 
corporations can continue serving the 
public and under terms and condi- 
tions which will be far more satisfac- 
tory to them than the uncertainties 
and hazards of the past, and at the 
same time, due to the removal of these 
uncertainties and hazards, the public 
and the state will be served with even 


Public Service Corporation 15 


a better service and under more favor- 
able conditions of charge than in the 
past. 


Very nearly the entire water power 
development industry in this country 
is held up at the present moment 
awaiting the settlement of the ques- 
tion of dealing with water power sites 
by the various governing bodies. It 
should not be a difficult matter, and 
it is not a difficult matter to formulate 
rules and regulations which, while 
amply safe-guarding the State and the 
citizens, will also enable these poten- 
tial water powers to be turned to use- 
ful account in the development of the 
country and the conserving of the fuel 
supply. 


During the entire history of public 
utility operation throughout the coun- 
try, and notably during recent years, 
the charges for service have steadily 
decreased and the quality of service 
has been steadily improved — all de- 
spite marked advances in the cost 
of apparatus, materials, supplies and 


"3.0112 059261963 sd 


16 The Great Problem of the 


wages. It is obvious that this situa- 
tion cannot be maintained indefinitely. — 


None of these questions will reach. 
the conclusions earnestly prayed for 
herein until they are taken from the ae 
hands of the uninformed, the vicious, ie 
and the professional politicians and Rais 
put in the hands of conservative, 
thoughtful and fair minded adminis- 
trative bodies. 


ft 


